This invention relates to providing termination benefits for employees who have been non-voluntarily terminated from employment.
One common way to control such benefits is through a private arrangement between an employer and each displaced employee, for example, a standard severance policy or a special termination package. Typical arrangements provide for a single payment on the date of termination. The amount of the termination payment is often based on the terminated employee's salary level and tenure. Outplacement services are sometimes offered.
Government sponsored unemployment insurance programs also typically pay benefits for a fixed number of weeks and usually are funded by premiums imposed on employers.
Private long-term disability insurance, funded by premiums, pays benefits when an employee is unable to work because of illness or injury.
An employee can also privately obtain coverage that continues payment of credit obligations for a brief period during unemployment.
Non-voluntary job changes are common. The causes include “downsizing”, “rightsizing”, mergers and acquisitions, product line changes, technology advances, degregation expanding global markets, and geographic redistribution of work force.
Although time between jobs tends to be limited for anyone who actively seeks a new job, it can be longer than is provided for in typical severance packages. The “fixed” monthly living costs incurred by moderate and high income employees, such as mortgage, credit card debt, tuition, car and insurance payments, tend to be large. An interruption in an employee's income stream after termination from one job and before the start of another one can cause disruption in life style and jeopardize his credit rating and therefore be a significant concern to him.
Many employers incur large costs for non-voluntary terminations of their employees. The annual costs of non-voluntary terminations may vary and in an occasional year be sharply higher than normal.